Jollibee and Pret a Manger: a healthy food combo for China?

Imagine that you could have a combo – a fried chicken with crayfish sandwich and an organic coffee – in one shop instead of two.

If you fancy this combination, perhaps you understand better why Jollibee Foods Corp, a Filipino multinational chain of fast food restaurants, wants a slice of Pret a Manger.

But many people scratched their heads over a potential bid from Jollibee, owned by the Chinese-Filipino tycoon Tony Tan Caktiong (Chen Juezhong), who wants to buy the British sandwich and salad chain for a rumored US$1 billion before its pending listing on the New York Stock Exchange.

That’s because the two successful fast-food franchises are so different. Jollibee made its name in South Asian markets for selling sweet fried chicken and burgers, while Pret a Manger ran a health-focused chain in international cities.

However, the two converge in how to conquer new markets such as China, where different franchises such as McDonald’s and KFC are trying to find the right formula to please the 1.38 billion population.

KFC led McDonald’s all the way in China with 5,300 outlets but it seems to be struggling now with tepid sales growth. McDonald’s, whose outlets in China are now owned by Citic and the Carlyle Group, outlined a new plan last month to add 2,000 restaurants over the next five years to give it a total of about 4,500 in China by 2022.

Read: How McDonald’s can improve penetration of China market

It is not difficult to understand why Jollibee, with 2,700 stores worldwide, is looking at expanding overseas and has been in talks with Pret a Manger’s financial advisors – it is keen to buy a “healthy” franchise in the wake of the global trend toward healthy eating and living.

Pret a Manger has a healthy business, with a profit of £93m (US$125 million) from it 600 stores last year.

Asia, and notably China, seems to be the new focus for Jollibee. Last year, the Philippines’ No.1 fast-food store signed a deal to set up 1,400 Dunkin Donuts stores in China over the next 20 years.

Jollibee has over 400 stores in China, mostly through Yonghe King, well-known but non-Western restaurants in China. Last year the company made clear that it plans to add 20 to 40 stores a year. Pret, on the other hand, opened its first store in Shanghai three years ago.

The aspiration to expand comes in tandem with another cross-border acquisition. In May, Japanese noodle-maker Toridoll acquired Hong Kong’s popular Tam Chai Yunnan noodle chain for 15 billion yen (HK$1 billion).

This was the first overseas acquisition by Toridoll, which operates 890 restaurants in Japan along with 340 outlets overseas. The takeover gave the Japanese group 48 Yunnan Mixian (rice noodle) shops in Hong Kong.

The hot and spicy noodle deal gets many excited at their merger, but it may take a while for Jollibee lovers to see what emerges from the Pret a Manger proposal, which would be the Filipino group’s biggest overseas acquisition.

Neither Jollibee or Pret have been able to make public statements yet on their potential tie-up.

Read: Jollibee draws crowds to new North Point branch